On impulse: Building relationships with repeat customers

All of my clients have heard me say this over and over again: Business is all about relationships. And one great way to build relationships is to provide your customers with ongoing relevance. If you own a specialized retail store, this means providing items that may be outside of your specialty but add to the customer’s purchasing enjoyment or help them out in a pinch.

Here are some tips for using add-on, impulse items to develop customer loyalty and increase sales.

Focus on existing customers. According to the 80/20 rule (also known as Pareto’s Principle), 80 percent of your business will come from 20 percent of your customers. So to grow your sales, it’s essential to focus on building relationships with existing customers. For example, if you own a book store, your repeat customers buy books for themselves and others, and they trust your recommendations. Good add-on items would be small gifts — mugs, toys, gift bags — so that when your customers think “gift,” they think of your store.
Provide a “now” need at a “now” price. The magic equation is to offer a product that customers need now, combined with a price point that causes them to act now. If you own a hardware store, a repeat customer might stop in during a rain storm because he or she remembers seeing your umbrella display. The customer probably isn’t in the mood to buy a fancy $40 umbrella but will spend $8 to get through the day. To set your price points, it’s important to know who your repeat customers are and what their impulse-buying price range is.

Appeal to wants, not just needs. Add-ons don’t always have to solve problems: They can also appeal to customers who are simply in the mood to spend. If you own a dress boutique, perhaps you have a loyal customer who comes in a few times a year to buy frocks for special occasions. But today she got a raise and wants to celebrate with a little splurge. So she stops in to check out the sterling silver jewelry she noticed on her last visit. Each sale like this strengthens your relationship and leads to future sales. But keep in mind that when someone is “spending to spend,” your store is competing with restaurants, movie theaters and big-box stores — so the key is to make the spending experience at your business more pleasurable and emotionally satisfying.
Let your customers know. In the course of developing relationships with repeat customers, develop a sub-context conversation that lets them know what new items you have that might be useful or appealing to them in the future. You can also use merchandise displays to draw attention to your impulse items — for example, an attractive vignette display near the check-out area.

Start small. Want to give it a try? Don’t get overzealous. Start small and test your market. Buy one or two items, purchase the minimum quantity, and see what happens. If the items aren’t selling, experiment by adjusting the products or the price points. Once you’ve found a some items that work, add more as customers get accustomed to the new selections.
With more than 15 years of experience, Kimberly Hunter is a business developer at Mountain BizWorks and a business consultant in advanced marketing and small-business growth.

To learn more about business coaching or classes from Mountain BizWorks, call 253-2834 or visit www.mountainbizworks.org.

— Mountain BizWorks supports small businesses in Western North Carolina through lending, consulting and training. For more information, visit mountainbizworks.org.